Bad News is Good News
The Compound and Friends
The VIX Is a Fear Indicator of Puts and Calls for the Near-Term S&P 500
The VIX is designed to tell you what do people expect the S&P 500 to move on a yearly basis in the next year. But if you want to know what's the daily swing, you divide by 16. The VIX at 32 implies that the market is expecting a 2% move on a daily basis for the next 30 days. That is extraordinarily high volatility. It doesn't mean 20 days from now we can have people going crazy and buying more puts in it.
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